Each week I meet with an array of prospective clients who disclose that they have more than one active financial advisor. They might have one investment account managed at a broker-dealer and one or more elsewhere overseen by other advisors. So, I’ll often ask, “What are you trying to accomplish by having more than one advisor?” The common and expected response revolves around “diversification.” Mind you, they are also meeting with me to discuss yet another advisory relationship. I have found that this reasoning is deeply rooted: Investors may be reluctant to terminate an existing advisory relationship. They may have a short-term desire to validate or compare advisors. They may receive new and perhaps better advice, eschewing that of their current advisors; or they may simply fear losing everything.

Advisor diversification is quite common among high net worth investors. But more times than not, the strategy is flawed, counterproductive and outright detrimental.

Are your advisors’ responsibilities, strategies and recommendations integrated? The risk exists that each advisor is operating in a vacuum with little to no cross communication. This could result in improper diversification, a sub-optimal risk profile, holdings that neutralize one another or gaps in the overall financial plan. Ultimately, these factors may lead to undesireable results.

Are tax considerations being coordinated across advisors and accounts? Tax considerations mainly revolve around visibility. The risk comes if all holdings are not clearly known, visible and accessible. This results in a higher incidence of tax-related mistakes and may result in overpayment or unnecessary taxes. Tax leakage, which suppresses the amount of money compounding on your balance sheet, directly impacts performance. Not only does it result in lost opportunity cost, but it limits an advisor’s ability to offset gains via tax loss harvesting.

Are you getting the best pricing? When your assets are not aggregated, you lose scale. You are afforded better pricing proportionate to the amount of assets you have invested. Consolidation of accounts can save you thousands of dollars a year in reduced advisory fees.

Who is at the helm? My clients are busy professionals with demanding responsibilities at work and at home. They rely on me and my team to engineer their financial plans and manage all the moving parts. I am responsible to call out and execute the plays and help them put points on the board, all while avoiding costly turnovers.

Our relationship allows them to remain in the “owner’s box” rather than on the field. In the multiple advisor model, the client ends up quarterbacking all those relationships. Time is one of, if not the most valuable, commodities you have. If you are managing multiple advisors, you are taking precious time away from your family or business.

Having one advisor is the simplest, most efficient model. There is no compelling need to diversify advisors if your preferred advisor is trustworthy, employs an integrated financial-planning model, uses a reputable third-party custodian and has an open-architecture investment platform with low-cost funds and ETFs from reputable issuers. More than anything, be certain the advisor you select represents your interests clearly as a fiduciary.

Michael S. Schwartz offers advisory services as a representative of Northwestern Mutual Wealth Management Company (WMC), a limited purpose federal savings bank, and a wholly owned subsidiary of The Northwestern Mutual Life Insurance Company, Milwaukee, Wis., (NM). Northwestern Mutual is the fleet name for NM, its subsidiaries and affiliates. Investments held with or managed by WMC are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by WMC or its affiliates and are subject to investment risks, including loss of the principal. Michael S. Sch wartz is an insurance agent of NM (life insurance, annuities and disability income insurance), and Northwestern Long Term Care Insurance Company, a subsidiary of NM, and a registered representative of Northwestern Mutual Investment Services, LLC (NMIS), an NM subsidiary, broker-dealer, investment advisor, member, FINRA, SIPC. Pioneer Financial is a marketing name used by a group of Northwestern Mutual representatives (not all of whom are affiliated with WMC) including Michael S. Schwartz (referred to as the “firm”), and is not a legal entity, partnership, investment advisor, broker-dealer or affiliate of NM. The information contained in this article is not a solicitation to purchase or sell investments or securities. The views expressed herein are those of the author and may not necessarily reflect the views of Northwestern Mutual.

This article was originally published in the October/November 2015 issue of Worth.